Workers should not be paying for a recession that they did not cause
Rishi Sunak marked 100 days in office by claiming the country cannot afford “massive” pay rises for nurses. In a TV interview, the prime minister on Thursday said he’d “love to give the nurses” the money because it would “make my life easier”, but added: “Even if it’s not popular, it’s the right thing for this country to stay the course.” Mr Sunak was so unmoved by the biggest day of industrial action over pay in more than a decade that even the most popular of causes would not be entertained. Earlier that day the Bank of England hiked interest rates, causing more pain for hard-pressed households and businesses.
The recession now forecast as a result is the price workers are paying for inflation that is driven by supply costs in food and fuel being wrongly cast as driven by demand. This is no accident, as an insightful report by the Trades Union Congress makes clear this week. Since 1979, economic policies have seen a “doom loop in GDP, and a parallel ‘boom loop’ in wealth”. The doom loop starts with the government claiming that it has to “fix” the public finances, and proceeds by public spending cuts which then lead to lower demand and lower growth – with the cycle restarting. This flies in the face of evidence that infrastructure spending pays for itself through extra economic growth. Such inconvenient facts are dismissed.